Beijing Will Ban Coal Burning In Six Districts By 2020

Getty/Xurxo Lobato

In a potential blow to Australia’s coal industry China is moving decisively to deal with its growing pollution problem by phasing out the use of coal and coal fired electricity generation is going to be phased out by 2020.

The Shanghai Daily reports that “the Beijing Municipal Environmental Protection Bureau, the districts of Dongcheng, Xicheng, Chaoyang, Haidian, Fengtai and Shijingshan will stop using coal and its related products, and close coal-fired power plants and other coal facilities”.

The pollution problem in China has become acute in some areas and the paper reports that, “According to official statistics, coal use accounted for 25.4 per cent of the capital’s energy consumption in 2012. The figure is expected to shrink to less than 10 percent by 2017”.

Chart: PWCS June Report

That could be a problem for Australia’s already embattled coal industry given the size of China as an export destination for Australian coal. According to data from Newcastle’s Port Waratah Coal Services China has accounted for just over 25% of coal through Newcastle, the world’s biggest coal export hub in 2014.

Last night Newcastle coal futures on the ICE exchange for September delivery rose 55 cents to $69.85 tonne but the price of Newcastle coal has been in free fall for the best part of 3 years now from a high around $135 tonne in 2011 to the current price of $69.85 tonne.

There is some hope that a base is being formed and that this news is already baked into the cake but as China moves away from coal use and invests in clean energy it seems any chance of a boom as China grows may prove ephemeral.